After more than a year of pumping money into financial markets to buoy the troubled economy, the Federal Reserve began to reverse course Wednesday, taking the first step to withdraw some of those trillions of dollars by announcing that it will phase out an unprecedented program to purchase some of the government’s own debt. By ending the $300 billion program to purchase U.S. Treasury bonds, instituted in a bid to drive down interest rates at the height of last winter’s market meltdown, the Fed bowed to worries about inflation and signaled that it thinks the worst of the recession is …

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Federal spending surpassed the $3 trillion mark for the first time in history during July, and the record-shattering fiscal year still has two months to go. The U.S. government spent more money last month - $332 billion - than in any other month in history, the Treasury Department reported Wednesday. Outlays were more than double tax receipts in July, generating a monthly deficit of $181 billion. For the first 10 months of fiscal 2009, which ends Sept. 30, the budget deficit totaled $1.27 trillion, nearly three times last year’s record annual deficit of $459 billion. As government spending has soared …

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NEW YORK (AP) — A more upbeat Federal Reserve is reassuring investors that they’ve been making the right bets. Stocks bounded higher Wednesday after the central bank ended a two-day meeting by saying the economy appears to be “leveling out” rather than shrinking at a slower rate. The Fed’s more positive take on the economy than it had in June wasn’t surprising but it still bolstered hopes for a recovery. Wednesday’s advance energized the market’s summer rally after it stalled on Monday and Tuesday. Major market indexes jumped more than 1 percent, including the Dow Jones industrial average, which rose …

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OPINION/ANALYSIS: The U.S. is headed for a fiscal meltdown. Even before Congress began calling for a hugely expensive overhaul of health care, the federal government was a staggering $56 trillion in the hole, in terms of unfunded obligations. That’s $184,000 of debt for every American. Even after its tax increases, the House health bill would add an additional $10 trillion in red ink. No wonder foreign investors as well as ordinary Americans are beginning to worry we won’t be able to pay our national bills. But even if Congress rethinks an explosion of new health care debt, we still face …

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GENEVA (AP) — The United States has won a wide-ranging ruling against Chinese trade practices that could provide massive market opportunities for American makers of everything from CDs and DVDs to music downloads and books. The verdict released Wednesday at the World Trade Organization in Geneva finds definitively against China for forcing American media producers to route their business in China through Chinese state-owned companies. The WTO victory comes as President Barack Obama is being pressed to be tough on trade rules with China, which many Democrats in the U.S. Congress blame for America’s soaring trade deficits and lost manufacturing …

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American workers who still have their jobs are laboring harder than ever, keeping their companies operating profitably following the biggest rounds of job cuts since the Great Depression. Productivity soared in the spring, helping to bolster corporate profits as the economy approached the trough of the nation’s deepest postwar recession. Employers shed workers faster than output declined in the second quarter, sending productivity surging at its most rapid pace in nearly six years, while labor costs plummeted at their fastest rate since 2000. Productivity, which measures output for each hour of work, jumped at an annual rate of 6.4 percent …

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WASHINGTON (AP) — Productivity surged in the spring by the largest amount in almost six years while labor costs plunged at the fastest pace in nine years. The Labor Department said Tuesday that productivity, the amount of output per hour of work, rose at an annual rate of 6.4 percent in the April-June quarter, while unit labor costs dropped 5.8 percent. Both results were greater than economists expected. Productivity is a key ingredient for rising living standards because it means that companies can pay their workers more with the wage increases financed by rising output. However, in the current recession, …

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Despite recent signs of economic improvement, defaults are soaring on all kinds of loans to businesses and consumers, including commercial real estate, prime mortgages and credit cards. These rising defaults are causing deep losses at banks further imperiling the credit system, and have become a major reason - along with high unemployment - why the Federal Reserve is expected to keep interest rates near zero when it meets on Wednesday. Fed officials have sounded alarms recently about the deepening crisis in commercial real estate: Property prices have fallen by 35 percent and are causing a tidal wave of defaults among …

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NEW YORK (AP) –With the stock market in a bit of a news lull, investors decided to lock in some profits. Stocks fell modestly Monday in the absence of any major corporate or economic developments. Investors were cautious ahead of a two-day meeting of the Federal Reserve that starts Tuesday, and they’re waiting for retail earnings reports to give some clues about consumer spending for the rest of the year. Bond prices jumped as stocks fell. Monday’s moves in both the stock and credit markets weren’t surprising after major stock indexes shot up 1 percent last week. The Dow Jones …

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NEW YORK | Stocks fell modestly Monday in the absence of any major corporate or economic developments. Investors were also cautious ahead of earnings reports from major retailers and a two-day meeting of the Federal Reserve on interest rates that starts Tuesday. Bond prices jumped as stocks fell. The day’s selling wasn’t surprising after major indicators shot up 1 percent last week, including a surge Friday in response to the government’s stronger-than-expected jobs report. With employment and housing numbers looking better, consumers are likely to be one of the market’s main concerns during August. Big retailers such as Wal-Mart Stores …

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